Wall Street hit as tech softness continues

Wall Street fell sharply on Thursday, with the S&P 500 and the Dow industrials suffering their worst daily percentage drops in about six weeks, as a recent decline in technology shares deepened and outweighed strength in bank shares.

The technology sector, which has led the S&P 500's 8-per cent gain for the year, dropped 1.8 per cent, and were the worst-performing major group. Declines in big tech stocks, including Apple and Microsoft, weighed the most on the benchmark S&P.

Financials and energy were the only sectors in positive territory as investors may have been rotating into groups that have lagged this year.

"US equities have remained extended, at or close to record territory for an extended period of time really without a tremendous amount of conviction in the market," said Peter Kenny, a senior market strategist in New York.

"It's really been treading water. Without a major stimulus to drive prices higher, equities have to reset and that's what they're doing today."

The Dow Jones Industrial Average fell 167.58 points, or 0.78 per cent, to 21,287.03, the S&P 500 lost 20.99 points, or 0.86 per cent, to 2419.7 and the Nasdaq Composite dropped 90.06 points, or 1.44 per cent, to 6144.35.

The Nasdaq closed below its 50-day moving average for the first time since April 13, breaking below a key technical support level.

The CBOE Volatility index, the widely followed barometer of expected near-term stock market volatility, rose to a six-week high of 15.16, before paring some of the move.

Equity investors also may be concerned about the rise in interest rates globally, as a slew of hawkish comments from central banks signalled the beginning of the end of ultra-loose monetary policy. European stocks also declined.

Financials were the bright spot for the stock market, rising 0.7 per cent.

Energy inched 0.1 per cent higher. Oil prices edged up after a decline in weekly US crude production temporarily eased concerns about oversupply.

Investors have been concerned about tepid US economic growth as the Fed is raising interest rates from very low levels.

Data showed the US economy slowed less sharply in the first quarter than initially estimated due to unexpectedly higher consumer spending and a bigger jump in exports.

In corporate news, Rite Aid shares slumped 26.5 per cent after Walgreens Boots Alliance scrapped its deal to buy Rite Aid after failing to win antitrust approval, but said it would instead buy nearly half of the smaller rival's US stores.

Walgreens also ended a related deal to sell as many as 1,00 Rite Aid stores to Fred's Inc, sending Fred's shares down 22.8 per cent. Walgreens shares rose 1.7 per cent.

Nike shares rose after the market closed following the company's quarterly results.

Declining issues outnumbered advancing ones on the NYSE by a 2.38-to-1 ratio; on Nasdaq, a 1.69-to-1 ratio favoured decliners.

About 7.9 billion shares changed hands in US exchanges, above the roughly 7.3 billion daily average over the last 20 sessions.